Costs depend on circumstances

Saturday

Sep 28, 2013 at 12:01 AMSep 29, 2013 at 1:01 PM

A wide range of personal circumstances make it tough to sum up how affordable - or unaffordable - health coverage will be for the minority of Ohioans younger than 65 who don't have insurance through an employer or Medicaid. Two Columbus residents show why.

Ben Sutherly, The Columbus Dispatch

A wide range of personal circumstances make it tough to sum up how affordable - or unaffordable - health coverage will be for the minority of Ohioans younger than 65 who don't have insurance through an employer or Medicaid.

Two Columbus residents show why.

Derek Lory, a 30-year-old smoker, is uninsured. When the online health-insurance marketplace launches next year, he could qualify for a government tax credit that would pay as much as two-thirds of the cost of his premiums. Despite that help, Lory said he doesn't think he can afford the coverage.

Denise Goodman, a 57-year-old self-employed nonsmoker with a pre-existing condition, makes too much money to qualify for any government assistance in the marketplace.

But next year, she'll pay a small fraction of the $36,000 in premiums she's paying this year. She'll be shopping an individual marketplace that no longer lets health insurers charge so-called high-risk enrollees significantly more or deny them coverage.

"Every consumer will make their determination of what's affordable," said Ken Weixel, a partner with the health-care practice at Deloitte and Touche who's based in Columbus. He said it's unlikely that the new penalty for being uninsured, which begins next year, will drive behavior - at least at first.

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But some things are clear. In Ohio, where insurance regulation has long been minimal, health insurers will have to offer individuals more-comprehensive plans. As a result, Lt. Gov. Mary Taylor, a vocal critic of the Affordable Care Act, has warned that individual premiums will be, on average, 41 percent higher than the coverage currently available.

Taylor also has criticized the cost to the federal government of subsidizing the exchange: about $23 billion in fiscal year 2014, including $16 billion in premium credits that will help people nationwide pay for coverage.

Still, experts who have examined the rates filed by health insurers in Ohio say they're lower than expected.

"Overall, insurers are putting forth premiums that look pretty reasonable, given the coverage," said Gary Claxton, a vice president with the nonpartisan Kaiser Family Foundation, which released an analysis this month of premiums in 17 states where rates have been made public, including Ohio.

The lower-than-expected rates suggest that health insurers don't believe that only sick people will be attracted to the health-insurance marketplaces that launch in January, Claxton said.

A Dispatch review of premium rates compiled by the state Department of Insurance found that the lowest-cost plan available in central Ohio will be offered by Dayton-based CareSource.

The plan would cost a 25-year-old who doesn't use tobacco $187.36 a month, or about $2,248 annually. In contrast, a 64-year-old who doesn't use tobacco would pay $559.83 a month, or about $6,718 annually. It is a silver plan, meaning that, on average, it would cover about 70 percent of the enrollee's health-care expenses.

Those prices don't include the tax credits that many people will receive if they buy coverage through the government marketplace. And for individuals and families with incomes at or below 250 percent of the federal poverty level, cost-sharing subsidies will lower caps on out-of-pocket costs.

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Still, there will be some sticker shock, including younger people who have bought individual coverage before. Unless they are younger than 30, or have to spend more than 8 percent of their household income, they will not have the option of buying catastrophic coverage. Such coverage provides a limited safety net for unexpected, high-dollar medical care at a lower cost than a plan with more-comprehensive health benefits.

Instead, those younger people will have to buy insurance that includes "essential benefits" such as maternity care, mental-health services and prescription drugs.

And younger Ohioans will subsidize the care of older Ohioans more than in the past. Currently, premium rates for those on the cusp of Medicare eligibility are about six times higher than those for young adults, according to a report commissioned by the state Department of Insurance. Under the new rules, those rates can be only three times higher.

Smokers and other tobacco users will pay a surcharge for most of the plans offered on the exchange: CareSource will charge 18 percent; Anthem Blue Cross and Blue Shield, 25 percent; and Medical Mutual of Ohio, 30 percent. Molina has no tobacco surcharge, but it does not offer tobacco users the cheapest plans.

Geography also will play a role. For example, Chillicothe residents will pay nearly 37 percent more than residents of Canton next year for the same coverage through Anthem Blue Cross and Blue Shield on the health-insurance exchange.

But for Medical Mutual of Ohio coverage, Chillicothe residents will pay 18 percent more than Canton residents. And for coverage from Molina, Chillicothe residents' rates will be the lowest in the state, 22 percent lower than Molina premiums will cost Dayton residents.

The regional disparities partly reflect the varying levels of clout that health insurers have in negotiating rates with hospitals and doctors.

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When choosing coverage, consumers should not consider only premiums. They also should look at a plan's deductibles and out-of-pocket expenses. And they should check to see whether they will be able to continue seeing their current doctors.

"You are absolutely going to see narrow networks" in Ohio's federally run health-insurance marketplace, Weixel said.

Narrow networks offer enrollees fewer choices in doctors and hospitals. In concept, a health insurer might guarantee a hospital system the exclusive right to provide care to those who enroll in its plan. In exchange for providing that volume, the insurer probably would expect health-care providers to charge the insurer less for the care provided to enrollees.

Eventually, that practice could become more common for health insurance that employees access through the workplace.